New Microsoft Surface Tablet, Big Reversal

So Microsoft is officially entering the tablet wars with the Surface. What a difference a year can make. Perhaps the most interesting part about the upcoming Windows tablet, at least from a business perspective, is that Microsoft is building it from end to end.

Unlike with PCs and smartphones, there’s no involvement from the likes of HP, Dell or Nokia. The Microsoft Surface is going to be a Microsoft product through and through, as evidenced by the Windows logos all over it.

It’s a big departure for the company, which has built most of its fortune with partners. Microsoft has historically made the software that has powered the hardware built by a host of vendors. One key standout, however, happens to be the company’s most successful current product: the Xbox 360.

At last year’s Electronic Entertainment Expo, I asked Dennis Durkin, chief operating and finance officer for Microsoft’s interactive entertainment business, if the vertically integrated approach with the video game console could be applied to other parts of the company. His answer was politely phrased, but it amounted to a big fat no. “Because we’re doing so many unique things with the hardware, it makes sense for us to design it,” he said. “In other places that may not make as much sense, it may make more sense to ride an ecosystem of partners.”

Here’s a little more of that conversation:

With the multitude of product line and marketing reorganizations at Microsoft the past few years, it’s likely that some executives could have been left out of the loop in regards to the new thinking. Still, Durkin’s comments were consistent with everything Microsoft has said in the past.

What’s responsible for the 180? It could be the 360—it’s hard to ignore the fact that the one device having continued success for the company is also the one Microsoft has complete control over.

The different direction is also probably the result of the huge success being enjoyed by Microsoft’s arch-nemesis Apple, which has ridden vertical integration to the top of the tech world.

Microsoft and others are learning that the open approach may not be the best way forward after all, that perhaps it’s best to fight fire with fire. Windows Phone 7 and Android are great examples—while both smartphone operating systems allow a large number of vendors to sell their own versions, the problem is that such products are hard to differentiate from each other. After all, how is one vendor’s Windows Phone 7 different from another vendor’s?

The open approach also means giving up considerable control and flexibility. Nearly every app developer I’ve spoken to has mentioned how much they hate designing for Android because of this. With carriers and device makers having large degrees of freedom with Google’s operating system, they’re splintering it. Creating apps for Android, many developers say, is a huge headache as a result.

Google must know this is a problem and may itself may be moving to an integrated model in phones and tablets, with its recent purchase of Motorola as a potential solution.

Don’t look now, but the idea of openness and partners sure looks like it’s getting thrown on the scrap heap of technology eras gone by. That said, there’s no guarantee that a vertically integrated approach will work. Just look at BlackBerry…